The Merricks Capital Partners Fund (the Fund) returned 0.7%* in February and a 9.9%* return on an annualised basis since inception. The Fund paid a 4.0% distribution in mid-February.
During the month the RBA and RBNZ cut rates by 25bps and 50bps, respectively, reinforcing a supportive monetary environment for real asset valuations. Equity markets softened on mixed corporate earnings and geopolitical uncertainty, while credit spreads adjusted accordingly (-1bp hedging cost for the month).
The Fund settled two new loans in February, expanding its exposure to agriculture and residential real estate.
In agriculture, a 2.0% allocation was provided to a repeat borrower in the dairy sector, financing working capital for a multi-property aggregation. Secured across seven properties in Tasmania, the loan carries an initial LVR of 60%, which is expected to reduce to 45% by April 2025, with repayment underpinned by contracted property sales. The facility is projected to deliver a net IRR of 10% (after fees and costs).
In residential, the Fund commenced deployment into a residential development loan in Mangawhai, New Zealand (4.3% allocation). This facility refinanced our existing land acquisition loan and supports the first three stages of a 665-lot residential project which have strong pre-sales coverage and a forecast IRR of 12.3% (after fees and costs). New Zealand’s residential market is rebounding after a 25% valuation reset (Reuters, RBNZ), with rising transaction volumes (CoreLogic), and forecasted 4-6% investment growth in 2025 (Reuters), supported by tight supply, high migration, and full employment. While Australia and New Zealand share similar supply-demand dynamics, the RBNZ’s faster rate cuts (from 5.5% to 3.75%, projected to 2.75% by late 2025) provide greater confidence in house and land subdivisions, whereas in Australia, the slower easing cycle favours shorter-term residential towers.
The Fund is actively recycling maturing loans and increasing allocations to residential, infrastructure, and agriculture, with agriculture and infrastructure exposure set to rise ~10% quarter-on-quarter following recent and upcoming settlements. A key loan set to commence drawdowns next month is the $96m floating wharf project in Broome, WA, representing a 7.6% total expected allocation once fully drawn. Demand remains strong ahead of the asset’s 2026 operational launch, with offshore oil and gas, passenger cruise ships, and bulk mineral sand operators already booking loading slots.
*These returns are stated net of fees and costs
